Proposed rates rise slashed

Palmerston North’s looming rates rise could be pegged back from the 4.4 per cent originally proposed before the Covid-19 pandemic to just under 2 per cent.

At the city council’s rates debate meeting yesterday, deputy mayor Tangi Utikere called the 1.95 per cent increase targeted for the year beginning in July ‘‘pragmatic and compassionate’’.

The rates increase was the main issue for those making submissions on the draft budget that went out for public consultation, with nearly half of the 49 telling the council to freeze rates or reduce the increase.

Their opinions on the proposed 4.4 per cent ranged from ‘‘not prudent’’ to ‘‘appalling’’ and ‘‘cruel’’ in light of the recession caused by the Covid-19 lockdown.

Cr Susan Baty said it would not be possible to freeze rates and still build a progressive city.

However, she said people and businesses were ‘‘hurting very badly’’ and a compromise was needed.

‘‘We do not want to rate people higher than absolutely necessary.

‘‘I would like to err on the side of ratepayers this time.’’

Councillors began the meeting with a raft of proposals from staff about where savings could be made, projects put off, and operational spending reduced to achieve an increase of 2.5 per cent.

They have asked for savings of a further $550,000 to be found, relying on chief executive Heather Shotter to make the cuts rather than making those individual decisions themselves.

That was a controversial approach, with some councillors arguing it was handing political responsibilities to staff.

The vote was close, at nine votes to seven.

Chief financial officer Stuart Mckinnon said staff had already worked extremely hard to trim the budget, and the year ahead would be a difficult one.

‘‘Any further cuts will likely result in service level reductions and potential job cuts.’’

The council was already going into the new financial year confronted by a likely $3.9 million drop in non-rates revenue.

That included reduced parking revenue of $700,000, the inability of the Palmerston North Airport company to pay a $600,000 dividend, and loss of events.

Changes in the council’s favour included assumptions about inflation being reduced from 2.2 per cent to 1.2 per cent, a potential saving of $900,000.

The council’s proposed spending on capital projects and major renewals for the year had been pegged back from $76.2m to $69.7m, recognising time lost on projects during Covid-19 restrictions, and the capacity of contractors to get more work done.

Many of the projects put off were related to servicing the Whakarongo urban growth area, the fourth stage of the James Line upgrade, and slowing down further stages of the city centre streetscape programme.

Cuts in operating spending related to events that were unlikely to be able to go ahead and about $1.15m in staff costs,

‘‘I would like to on the side of ratepayers this time.’’

Cr Susan Baty

including reduced training and travel. Shotter said no redundancies were planned.

The council would be starting the year with lower debt than anticipated, $142.6m instead of $155m, reducing interest costs by $200,000.

An earlier proposal to pay off $500,000 of debt was dropped to relieve pressure on rates.

Councillors added two new budgets to the plan.

One was $200,000 to support a wide range of community groups struggling for funding to get their work done. The other was $80,000 to improve the council’s ability to provide remote access to meetings for councillors, consultants and members of the public.